Q: What's up with CPX? I like my utilities to be boring, not bouncing. It leapt up by 7% last Friday, only to drop by more than 6% yesterday and is now down another 3.5% today.
It's done very well in the last year. Is that likely to continue? Would you hold, or trade this one for another utility?
It's done very well in the last year. Is that likely to continue? Would you hold, or trade this one for another utility?
5i Research Answer:
CPX has been bouncing around of late in part due to some of the end of year volatility driven by portfolio repositioning. The company got a BUY rating from Jefferies last week and TD upped its price target to $70. Conversely, CPX did a stock offering this week which caused the decline in price. We think it is worth holding as operational performance has been very strong of late. While we would not expect another 67% return next year, we think it has good potential and pays a nice yield. It is no longer cheap at 19x forward earnings, so there could be some consolidation next year.